Coverage: Fiat Chrysler to build three new Jeeps

Fiat Chrysler Automobiles on Sunday confirmed plans for a Jeep pickup along with the Wagoneer nameplate, saying it will launch both a Jeep Wagoneer and Grand Wagoneer and will invest $1 billion at plants in Michigan and Ohio to assemble the new SUVs.

Brent Snavely of the Detroit Free Press had the news:

The automaker said that Sunday’s announcement is the second phase of a plan announced in January 2016 to shift the assembly locations of a number of vehicles and said the plans announced Sunday will create 2,000 jobs.

The automaker said it will retool and modernize its aging Warren Truck Assembly Plant in Michigan and will make the Wagoneer and Grand Wagoneer SUVs there.

It did not release any details about the vehicles or photos.

Details about FCA’s massive plant reshuffling plan began to emerge in 2015, ahead of contract talks with the UAW.

“These moves, which have been under discussion with Dennis Williams and the rest of the UAW leadership for some time, expand our capacity in these key segments, enabling us to meet growing demand here in the U.S., but more importantly to increase exports of our mid-size and larger vehicles to international markets,” FCA CEO Sergio Marchionne said in a statement.

Bernie Woodall and David Shepardson of Reuters report that automakers have been under criticism from president-elect Donald Trump:

Many automakers plan to use the annual North American International Auto show in Detroit, which started on Saturday, to tout investments in the United States and a commitment to U.S. employment against the backdrop of Trump’s criticism of automakers for shipping vehicles into the U.S. from Mexico.

Automakers are girding for rounds of questions about Mexican investments and U.S. jobs in the wake of Trump’s harsh criticism of automakers.

Most of the major automakers in the U.S. have substantial vehicle making operations in Mexico, as well as complex networks of parts makers that supply their factories in the U.S. and support jobs and investment in states such as Ohio and Michigan.

FCA’s investment decisions were not related to Trump’s recent attacks Ford Motor Co, General Motors Co and Toyota Motor Corp for building cars for the U.S. market in Mexico, people familiar with company’s moves said on Sunday.

Jamie Butters and Tommaso Ebhardt of Bloomberg News note that Fiat Chrysler sells a higher percentage of light vehicles than competitors:

Among major automakers, Fiat Chrysler sells the highest percentage of light trucks, which tend to be more profitable than cars. For this reason, it’s also been seen as the most likely to benefit from the Trump administration and Republican-controlled Congress reducing regulatory demands for improved fuel economy, spurring a surge in the stock price.

“The sooner those new models will roll out of the factories, the better it is to support Fiat’s mix and therefore margins,” said Massimo Vecchio, an analyst at Mediobanca in Milan. “All major corporations are moving along the line of what Trump asked. They could get in exchange very likely a massive cut in the corporate tax rate, which is possible only if the U.S. increases” its gross domestic product, the broadest measure of economic activity, Vecchio said.

Fiat Chrysler employs more than 11,800 workers in Mexico at seven manufacturing facilities, which shipped 477,000 vehicles in 2015, according to the company’s website. Its models built south of the border include Ram trucks and vans in Saltillo and Fiat 500 small cars and Dodge Journey SUVs in Toluca.

Having the ability to make those big work trucks in the U.S. as well as Mexico provides a hedge against a potential tax on imported vehicles, which Trump has threatened against GM and Toyota Motor Corp., in addition to Ford.

“Politically, it follows along with everything that’s going on, in terms of domestic production,” said Tom Libby, an analyst with IHS Markit.